Plan to Pool LTE Patents Takes Shape

Few fields are fraught with as much patent litigation as the mobile device market. Now 10 companies have agreed to try another approach, at least so far as one high-speed wireless technology is concerned.

Via Licensing, which spun out from Dolby Laboratories but is still owned by that San Francisco-based company, on Wednesday is announcing the formation of a pool of patents associated with the cellular technology LTE, which stands for long-term evolution. The companies have agreed to contribute LTE patents to the pool, Via says, so that they can be aggregated and licensed together rather than having the companies individually enforce their intellectual property.

While most of the companies are prominent, the list does not include some of the players involved in recent high-profile lawsuits or widely identified with communications patents, such as Apple, Samsung QualcommNokia, Ericsson Google and its new Motorola unit.

But Via says more may join in. “We really expect to see additional companies coming on in the very near term,” says Roger Ross, the company’s president.

Patent pools aren’t a new idea. They have frequently emerged in cases where there are many companies that hold patents related to a particular business, making negotiating licenses from all of them complex and expensive.

One of the best known is MPEG LA, which was formed in the 1990s by a group of big electronics companies to license patents related to video compression and has later branched into other fields. Intel in 2008 announced a plan to pool patents related to WiMax, another wireless communications technology.

LTE attracted more interest than WiMax from most big wireless communications carriers and is becoming a built-in feature to boost the bandwidth of smartphones, such as Apple’s new iPhone 5.

Ross says the patents being contributed by the 10 companies are “standard essential” patents, which means those deemed fundamental to make goods or service associated with technical standards defined by industry groups. Companies involved in standard-setting efforts are frequently required to license related patents on a “reasonable and non-discriminatory” basis, a phrase frequently shortened to the acronym RAND.

“One of the things that we do is give them a conduit to ensure that we are meeting their RAND obligations,” Ross says.

Via is not disclosing the royalty rates it intends to charge yet. But it expects the rate to be considered reasonable by potential licensees, such as companies making smartphones.

Some veterans of the Silicon Valley patent scene aren’t optimistic the new pool will have much of an impact in heading off litigation, in large part because of the absence of some of the biggest combatants and patent holders.

“It’s hard to see how you amass most of the players such that the pool becomes interesting enough,” says Yar Chaikovsky, a patent attorney with the firm McDermott Will & Emery. “I’m pessimistic in general.”

John Amster, CEO of the San Francisco intellectual-property service RPX, has a similar perspective. “Historically patent pools have been a very efficient way of organizing the patent license requirements around emerging technologies,” he says. “But only the ones in which all the key players participate at launch have been successful.”

Ross, while expecting to land some other participants, acknowledges that some companies tend to go it alone on patent matters. “Some of them I expect to join and some I’d expect they won’t,” he says.